New company brings back bandwidth trading

By Stuart Corner

UpdatedJuly 26, 2013 — 2.47pmfirst published July 23, 2013 — 7.00am

Energy company Enron pioneered the idea of internet bandwidth trading – the buying and selling of spare communications capacity – back in 2000. Like its creator, the idea crashed and burnt a couple of years later. Now, a new Australian company, intabank, has revived the concept.

Intabank allows companies needing additional, short-term connectivity to purchase it from others with excess capacity, rather than buying from service providers that normally require a long-term commitment. It is the brainchild of chief executive Andrew Sjoquist, and sales and marketing director David McGrath, co-founders of Australian cloud provider ASE.

The company will initially offer connectivity to and from the data centres used by ASE in Australia. It has facilities in Sydney, Melbourne, Perth, Singapore, Shanghai, Hong Kong, Tokyo, Frankfurt, London, Paris, New Jersey and San Jose, and says it plans to add six data centres in coming months.

Non-ASE customers can access the bandwidth by buying a connection to one of the company’s data centres from a local service provider.

Mr Sjoquist said the company was born from requests by customers wanting to exploit spare communications capacity, or gain access to capacity for peak periods without being locked into long-term contracts. He said customers were achieving significant savings.

Advertisement

‘‘The test companies ... have been seeing prices that are at discounts of 50-80 per cent of what they would normally pay, and the sellers are recouping 10-15 per cent of the cost of their capacity.’’

Mr Sjoquist said companies could buy connectivity according to the file size they wanted to send, or the bandwidth. ‘‘You can specify the size of the file and the price you want to pay and we will see what speed we can give you. Or you specify the speed you want and the file size, and we will quote you a price.’’

He acknowledged that the Enron debacle had given bandwidth trading a bad name but said that much had changed since 2002.

“A lot of the players then had modelled their business on high premiums, but around 2002 the price of bandwidth dropped dramatically. And the amount of data on networks then was nowhere near what it is today.”

Mr Sjoquist said the service catered for companies operating outside normal hours, working on short term projects or doing overnight backups.”

Geoff Johnson, research vice president unified communications and network services with IT researcher Gartner, said that intabank was on the right track.

“There are no big barriers to doing this that I can see, and it is an extension of ASE’s existing data centre business. The potential customers are people they are dealing with already, and if you can offer an extra service to an existing customer, it is not a difficult sale.

‘‘I am fairly bullish about it.”

However, Mr Johnson indicated the new company wouldn’t be alone in the market for long.

“I don’t see anybody else doing anything like this yet, but I expect some of the big data centre operators might figure out something like this fairly quickly."